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Chapter 5: Q. 14 (page 130)

Describe the general appearance of a demand or a supply curve with infinite elasticity.

Short Answer

Expert verified

A straight line parallel to the horizontal axis.

Step by step solution

01

Step 1.  Definition

The extreme situation of infinite elasticity, also known as perfect elasticity, occurs when either the quantity demanded (Qd) or supplied (Qs) varies by an unlimited amount in response to any change in price. The supply and demand curves are horizontal in both circumstances.

02

Step 2. Explanation

In case of a demand with infinite elasticity, the demand curve would be a straight line parallel to the horizontal axis, instead of a downward sloping curve.

Similarly, the supply curve would be a straight line parallel to the horizontal axis instead of being an upward sloping curve.

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Most popular questions from this chapter

The equation for a demand curve is P = 2/Q. What

is the elasticity of demand as price falls from 5 to 4?

What is the elasticity of demand as the price falls from 9

to 8? Would you expect these answers to be the same?

If supply is inelastic, will shifts in demand have a larger effect on equilibrium price or on quantity?

What would the gasoline price elasticity of supply mean to UPS or FedEx?

Describe the general appearance of a demand or a supply curve with zero elasticity.

What is the relationship between price elasticity

and position on the demand curve? For example, as you

move up the demand curve to higher prices and lower

quantities, what happens to the measured elasticity?

How would you explain that?
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